Archive for December 14th, 2007
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Compass Bank - Personal and Business Banking
Compass Bank Provides Personal Banking, Investment Services, Small Business, and Commercial Banking.
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Filed under: Products and services, Management, Competitive strategy, Home Depot (HD), Lowe’s Cos (LOW), Bargain stocks
 Dateline, January 3, 2007: Bob Nardelli steps down as CEO at Home Depot (NYSE: HD). In leaving, Nardelli, who had been at the head of Home Depot for six years, scooped up a severance package valued at about $210 million, kindly tipped his hat, and slid his resume across the desks of Chrysler. Does this make the man an opportunistic corporate blood sucker, an overcompensated leadership figurehead, or just plain shrewd? My answer to that question would be, none of the above.
When trying to judge the departure of Robert Nardelli relative to his compensation and performance, two things need to be considered right on the front end. First, our jealousy factor must be removed from the equation. Second, we need to remember that compensation packages at this level are negotiated on the front end. Bob Nardelli didn’t “get away” with anything. He executed the terms of an employment contract, plain and simple. How many of the ambitious persons reading this blog wouldn’t have done exactly the same when given the same circumstances?
Most of the negative sentiment surrounding Nardelli’s well-heeled departure emanated from shareholders who were hurt by a slow yet significant decline in HD’s share value. But the fact is that within the past four years of Nardelli’s tenure, HD’s shares provided more consistent performance than the four years prior. Granted, investor’s haven’t seen Home Depot shares approach the past high of almost $70, but in light of today’s economy they probably won’t see anything like that in the near future, and that’s certainly not Nardelli’s fault.
Some analysts express the need to benchmark Home Depot performance against that of Lowes (NYSE: LOW). It would seem to me that in this scenario, its only analyst spin that puts Home Depot in a bad light. Even though they’re in the same field, they’re significantly different operations and only worthy of comparison as retail competitors. Once again, I state that’s certainly not Nardelli’s fault.
As money winners go, Bob Nardelli certainly was one for 2007. His departure from Home Depot raised many eyebrows, and also raised some important questions in regard to executive compensation. Through the year, top executive pay came under serious scrutiny, and it shall remain a matter of hot debate and adjustment for years to come due in part to the Nardelli effect. Perhaps we all won just a little bit when you take into account all the noise about executive pay packages that Nardelli’s Home Depot departure raised. Now we shall simply have to wait to see what the man does with Chrysler.
Be sure to check out more Money Winners of 2007.
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Filed under: Deals, Competitive strategy
 Penthouse Media Group has agreed to acquire the parent company of AdultFriendFinder, a website devoted helping adults find love — or at least sex. The site is different from more mainstream (although AdultFriendFinder’s traffic would seem to indicate its more mainstream that we care to think) sites like eHarmony in that the emphasis is on “hooking up” and there’s little in the way of bragging about couples who met on the site.
According to the USA This day, Penthouse, which was acquired by Marc Bell and Daniel Stanton out of bankruptcy in 2004, plans to aggressively pursue acquisitions and possibly take itself public in the next few years.
Here’s what’s interesting: this is a company that owns social networking websites and was founded in 1996. It just sold for $500 million.
Playboy (NYSE: PLA), the most famous brand in sex with an iconic magazine, websites, pay per view content, shows on E! and a mansion that’s the envy of each bachelor in America … currently sports an enterprise value of under $400 million.
The reason? Penthouse thinks it can make a lot of money with AdultFriendFinder and the other social networking sites that come with the deal. For all its history, Playboy has been providing investors with an anemic return on equity for years.
As Marc Bell, CEO of Penthouse Media Group stated, social networking is “where the money is.” Playboy is also trying its luck with social networking, but so far the results haven’t been too promising. PlayboyU.com has an Alexa ranking of 292,431. AdultFriendFinder.com? 70.
But I’ve to wonder: If Penthouse is willing to spend hundreds of millions on acquisitions as a prelude to a possible IPO, don’t they at least have to take a look at Playboy? If they do, that could turn into one of the more pleasing M&A stories in years — I love the idea of watching the FTC lawyers trying to protect the interests of consumers by blocking a consolidation of the porn industry.
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Filed under: Earnings reports, Industry, Competitive strategy, Goldman Sachs Group (GS)
 Sometimes it appears that the bankers at Goldman Sachs (NYSE: GS) are much smarter than their counterparts elsewhere. Now, there’s some fresh evidence that that’s true. The firm bet that securities backed by risky home loans would drop in value. According to The Wall Street Journal, taking that position “generated nearly $4 billion of profits during the year ended Nov. 30.” The paper says that a small number of bankers in a very small division of the bank made most of the investment that lead to the gain.
Clearly, the group didn’t share the information with many of the firm’s clients, who gambled in the opposite direction and lost.
Investors have to wonder whether the people at Goldman drink different water or breathe different air. The investment bank is the only company in it peer group to have a stock that’s up for the year. It has never been in any danger. One of its hedge funds, Global Alpha, did poorly and lost a great deal of money, but the rest of the firm was not affected.
Perhaps Goldman’s uncanny capability to make the right call is why it is considered the world’s premier investment bank.Trying to guess why that is true will never yield a real answer. Some observers say it is the “culture”. Others state it is the way that bankers are hired and trained.
Not matter what the cause, it has made the firm and its shareholders a lot of money.
Douglas A. McIntyre is an editor at 247wallst.com.
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Filed under: Deals, Rants and raves, Competitive strategy, Entrepreneurs, Media World
 Madonna has been a trend setter for three decades and has built, not just a music empire, but a financial one. She’s brash and savvy. The “Material Girl” who popularized wearing undergarments as formal wear and accent pieces has made another splash this year, not with her music or wardrobe, but with her new record contract.
She has abandoned the major record labels to sign on with a concert promotion machine for $120 million. Goodbye long-time record label, hello Live Nation (NYSE: LYV). In October, the iconic and very wealthy 49-year-old Madonna signed her biggest contract to date, and one Warner Music Group (NYSE: WMG) wouldn’t match.
Live Nation, the concert promoters, have acquired her touring and recording rights. Her first album was released in 1983, 26 24 years ago, and she has been going strong ever since. According to published reports: “The rights to Madonna’s tours, which continue to be highly profitable, will now be owned exclusively by Live Nation. Last year’s Confessions tour featured eight sell-out performances at Wembley Arena, which is managed by Live Nation. The tour grossed $260m.”
Specifics include an $18 million signing bonus and an additional advance of $17 million in cash and shares for each of the three albums in the ten-year deal. If Madonna goes on tour, she will get up to 90 percent of the profits, with only 10 percent reaching Live Nation.
This landmark contract is bound to alter the playing field in the music industry that has been combating internet and CD piracy once again. Madonna, though, won’t be following behind but leading the charge as she’ll be under contract well into her fourth decade.
Madonna the music machine is a well-established money machine. It might turn out that the on-stage nationally televised kiss between Britney Spears and Madonna that got everybody’s shorts all bunched up wasn’t a passing of the baton. It might turn out to have been a massive kiss-off! For since that time Britney has appeared in more court room battles, mugshots, and scandals then she has music achievements, and Madonna, not Britney, is the new Madonna – still out front — still making waves, setting trends — and collecting royalties.
Sheldon Liber is the CEO of a small private investment company and the principal for design and research at an architecture & planning firm.
Be sure to check out more Money Winners of 2007.
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By Nora Dunn
Halloween has come and gone, but there are still some frightening things that can happen any day of the year. For example:
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By Paul Michael
Anyone with a cell phone has suffered from those “no signal” or “service lost” moments. And they usually happen when your car has broken down or someone’s chasing you through the forest with a huge axe. As I live in snowy Colorado and have a Virgin Mobile (weak reception) I’ve been researching and testing methods to boost my phone in case of emergencies. Here are the five methods that worked, with varying success, for me.
Metacafe has once again come to my rescue on this one, it’s a great resource for those how-to videos I love so much. And as always, I’ve tried to find cheap methods that require little-to-no technical know-how. So, grab a pen, jot down your favorite and make your very own cell-phone booster. It could literally get you out of a potentially hazardous situation.
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By Paul Michael
You have to hand it to UPS. They crunched the numbers, they looked at the hard facts and they figured out that by limiting the number of left-hand turns made, you can save a whole bunch of money on gas.
Joel Lovell of the NY Times revealed on Sunday that the UPS has significantly cut down its gas usage by carefully calculating routes to avoid left-hand turns. Not each left turn of course, that would be ridiculous. But by employing a program called “package flow” the fleet of over 95,000 trucks can now avoid a huge number of left-hand turns, taking only the ones necessary to finish the trip.
As you're no doubt aware, left-hand turns are far more pricey because of the waiting time involved. There's rarely a “left on red” rule and thus drivers have to idle, wait for the lights to change and burn up gas. Depending on the cross street, that can take up considerable time and fuel. The “package flow” program has put an end to most of that, and has also saved time and mileage in the process.
As always, the proof of the pudding is in the eating. And these results are very tasty. Last year UPS shaved over 28.5 million miles off its delivery routes. That in turn has resulted in saving roughly three million gallons of gas! It's also reduced CO2 emissions by 31,000 metric tons. This is an example of lateral thinking at its ideal. It saves time, money and the environment, and everyone is a winner.
Those of you with those handy GPS navigation devices might want to consider doing something similar on your drive to work. If you can cut out the left-hand turns without eating up any extra miles or time, you could see a nice drop in your fuel bill. With the cost of gasoline still over $3 a gallon, that could add up to quote a nice pile of extra cash every year. Now, I'm off to send my holiday packages via UPS.
Permalink | 5 comments | Paul Michael“>Paul Michael's blog | Channel: Frugal Living, Automobiles and Transportation
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By Mark P. Cussen
If you are a student or parent struggling to pay for the cost of college, whether you have already graduated or are still in school, help is on the way. The College Cost Reduction and Access Act of 2007 is here, and will provide over $20 billion of aid to students and their parents over the next five years. This Act will benefit students and families from all walks of life, and not just the poor or middle class.
One of the key benefits provided by this Act is the drastic reduction of interest rates on subsidized Stafford Loans from its current level of 6.8% down to 3.4%, prorated over the next five years. The first drop in rates will go into effect in July of 2008, with subsequent rate reductions following through 2012. While the actual amount saved by students will obviously vary according to the size of their loan balance, the dollar reduction in payment amount for students with larger balances could easily add up to $1-2,000 per year.
The new legislation also calculates financial aid for 529 plan beneficiaries according to a new formula. If the owner of the plan is someone other than the student’s parent, then plan withdrawals won’t be counted as income or assets for financial aid purposes. However, the bad news is that withdrawals from any 529 plan owned by the student will now be counted as income in the financial aid formula, thus reducing the amount of aid the student is eligible for. It is therefore now in the ideal interest of both student and parent savers to transfer the ownership of the student’s 529 plan to a grandparent or other third-party owner in order to avoid this dilemma.
New graduates that are struggling to make ends meet on a small paycheck can opt for a new program that will recalculate their loan payments according to a more forgiving formula. The new formula limits the amount of the graduate’s monthly loan payment to 15% of his or her discretionary income. But after 25 years, any remaining debt is automatically canceled. This is obviously a huge windfall for students such as those in the medical or dental professions who can easily amass student loan balances of several hundred thousand dollars. Unfortunately, this provision won’t apply retroactively.
But another key feature of this provision is that if the payment is capped at an amount that does not cover interest, then that interest is added to the loan balance, thus lengthening the repayment period and increasing the overall loan balance. Therefore, graduates should think carefully and compute the possible effects of entering this program before committing. If they feel certain that their incomes will increase in the future, then this may be a safe alternative for now. If not, then this could end up being a trap.
Students that go on to work as teachers or social workers will have the remainder of their student loan balances forgiven after making 120 payments. Again, this provision is only valid going forward, and the schedule begins with payments made after October 1, 2007. The only possible disadvantage of this program is that under the current provision, the forgiven loan balance will be taxed as income to the graduate. Furthermore, upfront tuition assistance for students who concur to become public instructors in poverty-stricken schools or in subjects that are in great need of teachers will be made available. Graduates in other areas of public service, such as law enforcement and firefighting will be eligible for forgiveness of up to $5,000 of loans as well.
Lower income students will be able to receive an additional $500 in Pell Allow scholarships over the next five years, which could bring the total Pell Grant limit to over $5,000 in some cases by 2013. Pell Allows will now become available year-round as well. This could benefit approximately 5.5 million students altogether. About 600,000 additional students will become eligible for these allows as well. Finally, the College Savings Act raises the amount of money that students can borrow, thus reducing their dependence on more expensive loans from the private sector.
There are also many miscellaneous provisions that will help students defray the cost of their education. They include:
- Streamline the financial aid process
- Help students plan for textbook costs in advance each semester
- Strengthen college readiness programs
- Improve tuition and fee support for military and veteran students
- Make college campuses safer and provide increased assistance for schools trying to rebuild after a disaster
- Mandate equal opportunity for disabled students
- Increase the emphasis on science, technology and foreign language education
- Millions of students are going to benefit from these new rules in many ways. Look for more news on this development in the near future from your educational institution and in the media.
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